Murtuza Kothari vs. ITO, Ward-19(2)(2)

Parties Involved

Facts Summary

The assessee, Murtuza Kothari, did not file his return of income for the Assessment Year 2015-16. He sold an immovable property for Rs. 86,00,000/-. The Assessing Officer (AO) selected the case for scrutiny under section 147 of the Income Tax Act, 1961. The AO issued notices under sections 148A(d), 148, and 143(2) of the Act. The assessee submitted various documents including a sale deed, bank statement, valuation report, and others. The AO observed that the assessee disclosed the full value of consideration at Rs. 86,00,000/- and claimed a deduction under section 48 of the Act for Rs. 83,62,976/- as cost of improvement with indexation, resulting in a Long Term Capital Gain (LTCG) of Rs. 2,37,024/-. The AO proposed that the cost of acquisition claimed by the assessee should be taken at Nil, making the LTCG the entire consideration received, i.e., Rs. 86,00,000/-. The assessee argued that the property was acquired in exchange for tenancy rights and claimed the market value of the property as the cost of acquisition. The AO rejected the claim for deduction under section 54/54F due to lack of supporting documents. Aggrieved by the AO’s order, the assessee appealed to the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, whose order was also unfavorable to the assessee. Consequently, the assessee filed the present appeal before the Income Tax Appellate Tribunal (ITAT).…

Legal Issues

• 1. Whether the CIT(A) erred in not accepting the assessee's contentions and documents submitted.
• 2. Whether the CIT(A) erred in denying the deduction of cost of improvement and considering it at NIL.
• 3. Whether the CIT(A) erred in denying exemption under section 54 of the Act.
• 4. Whether the delay in filing the appeal was genuine and bonafide.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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